Bitcoin ETFs Add $250 Million in Surge Ahead of Expected Rate Cut – Decrypt

Bitcoin Exchange-Traded Fund (ETF) There is a renewed interest.

Figures published by blockchain data firm Arcam Intelligence show American funds added a total of about $250 million worth of Bitcoin on Monday, the most daily additions in more than a month.

The surge helped push the price of bitcoin itself above $61,000 per coin on Tuesday for the first time since September.

Why the sudden surge in demand?

First, the basics. An ETF is simply a fund that holds assets. In this case: BitcoinAnd it allows investors to invest through shares traded on traditional stock exchanges.

New funds BitcoinIt is driven by investor demand: individuals or entities buy shares that track the underlying price of an asset, and managers of funds that hold crypto assets make the purchases on behalf of investors.

Major asset managers including BlackRock, Fidelity and Grayscale launched these products in January. Get Approval From the U.S. Securities and Exchange Commission (SEC).

The products exploded in popularity in the first few months, drawing billions of dollars in investor funds, but demand has slowed in recent months, partly due to concerns about when and how much the Federal Reserve will cut interest rates.

The market is expecting the US central bank to cut interest rates tomorrow, but it is not yet clear how much borrowing costs will fall.

Some analysts have said a larger 50 basis point cut is more likely than a 25 basis point cut, and some investors are increasing their risk tolerance, experts said. Decryption.

“I think this is a direct response to the increasing likelihood of a 50 basis point rate cut rather than a 25 basis point cut,” said James Butterfill, head of research at CoinShares.

“We saw a real uptick in inflows last Friday,” he added, “as several members of the Fed made comments signaling a more dovish tone, hinting at a 50 basis point cut.”

The largest cryptocurrency hit an all-time high of $73,737 in March after investors scrambled to buy shares in Bitcoin ETFs earlier this year, sending prices soaring. Since then, Bitcoin has been volatile, falling about 18% from its peak.

But the tide appears to be turning. According to data from CoinShares released on Monday, $436 million flowed into cryptocurrency investment funds last week, with the bulk of that going into Bitcoin ETFs. This comes after investors cashed out a massive $1.2 billion from Bitcoin funds.

Will the expected announcement tomorrow send Bitcoin's price charts even higher?

Editor: Andrew Hayward